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R3, the Association of Business Recovery Professionals, has added its voice to
those calling for more regulation of debt management companies.
As debt management agreements are an informal arrangement, there is little or no
regulation and monitoring of them or the companies which manage them.
Some debt management companies will carry out both debt management agreements
and IVAs, but only when a formal IVA is proposed and a licensed insolvency
practitioner appointed does regulation start to bite.
There has been an upsurge in debt management companies administering IVAs, with
concerns that some may have been mis-sold to individuals, in particular those
who are reliant on state benefits for their income.
Tony Supperstone, President of R3 commented: "The level of personal debt has
rocketed and IVAs have followed this trend, this is not due to the relaxing of
legislation on bankruptcy but due to the easy availability of credit.
"The increase in aggressive selling of IVAs is no different to the hard-hitting
marketing of credit.
"The consumer is bombarded with offers of unsecured credit, with little
consideration as to how the customer will repay or manage his/her debts."
He added: "We are urging the regulation of debt management companies to ensure
that members of the public are fully aware of all their options, be it a debt
management agreement, IVA or indeed bankruptcy.
"We welcome the news that the Insolvency Practitioners Association are seeking
to develop a kite-mark for debt management companies. We think this will assist
greatly in the reputation of this advisory side of the market.
"We would also like to see corporate authorisation to regulate the entrepreneurs
behind large IVA providers.
"At the moment, the owners of the business are not monitored and regulated to
the same extent as the insolvency practitioners actually administering the IVAs.
"All the debt management companies that follow a proper code of conduct will
welcome regulation."
Source:
Getting Paid
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